ABP: Introduction to Analysis-By-Parts

BYE BYE BYE...IT AIN'T NO LIE

YOU DON'T NEED TO USE ANALYSIS BY PARTS ANYMORE!

There is a new Event Type in IMPLAN called Industry Impact Analysis (detailed) released on October 6, 2021. You can now enter Employment (Wage & Salary and/or Proprietor), Labor Income (Employee Compensation and/or Proprietor Income), Intermediate Inputs, Taxes on Production & Imports, Other Property Income, and Output from the Impacts screen.

It might sound crazy; but in 99% of cases, you don't need to use ABP anymore. Check out Industry Impact Analysis (Detailed).

Special thanks to *NSYNC for putting the song in our heads again. We all knew life would be much better once you're gone, ABP.

INTRODUCTION

Unless you need to change the underlying Multiplier matrix, Analysis-by-Parts is the suggested technique for analyzing an Industry that is a subset of a current IMPLAN Industry or for introducing a new Industry or new Industry definition.

Analysis-by-Parts is also the appropriate technique for analyzing non-profit and public Impacts.

Analysis-by-Parts is a technique by which you can analyze the impact of an Industry's production/spending in separate components using multiple Events instead of using a single Industry Event. Intermediate Inputs and Labor Income spending are the core impact factors of an Industry Event, initiating Indirect Effects and Induced Effects, respectively. Industries also allocate production spending to Other Property Income and Taxes on Production and Imports Net of Subsidies. The distribution of an Industry's income/total output to these factors of production is called a Leontief Production Function. When analyzing the impact of new production using a single Industry Event there are some capability limitations for you as the user to customize how the Industry spends money in order to produce. In other words, Industry Events only allow for a certain extent of customization to the Leontief Production Function on which the analysis is based. Using more than one of IMPLAN's other Event Type options gives you more flexibility and customization capabilities in your analysis.

DETAILED INFORMATION

To perform an Analysis-by-Parts, ideally you will want to know Direct Employment, Direct Labor Income and the Direct Intermediate Inputs or Output, as well as the Industry that your business is best represented by. However, all of these elements can be estimated from the IMPLAN Data as long as you have, at minimum, one data point for Industry's Direct Effect.

Analysis-by-Parts is the process of splitting or parsing an impact analysis issue into more specific parts.

ABP allows you to:

Specify the amount of commodity inputs
Specify the proportion of local labor income
Specify the proportion of local purchases
Use IMPLAN's special spending patterns

ABP is accomplished using combinations of Events Types. The total impact is the sum of the impacts of all of the following 3 parts of any Analysis-by-Parts:

Step 1: Intermediate Inputs (Supply Chain Indirect and Induced Effects)

Intermediate Inputs are determined and analyzed by IMPLAN for Industry Events, but they can also be modeled separately as a part of an ABP analysis to allow for more customization capabilities in two different ways. Intermediate Inputs that are purchased by the business can be analyzed either by using an Industry Spending Pattern Event or on an individual Industry or Commodity purchase basis using an approach called Bill of Goods.

Step 2: Labor Income (Direct Income Spending Induced Effects)

Use Labor Income Events in the Impacts screen.
Specification Employee Compensation should be paired with a Value of total income for Wage and Salary workers, and Proprietor Income should be paired with a Value of total income for self-employed workers. If the impact involves both types of labor, create 1 Event for each.

Step 3: Run the Analysis

Drag and drop all Events created in Steps 1 and 2 into a Group. Be sure your Group has a title and the appropriate Dollar Year, Data Year and Region have been selected. Then, hit run!

Step 4: Recreate the Direct, Interpret, and Report Results

Analyzing an Industry using Analysis-by-Parts is a workaround for the customization limitations in a single Industry Event. For this reason, the results are not as straight forward as the results produced in an Industry Event. Depending which approach you've taken to analyze the Industry's Intermediate Inputs, either using an Industry Spending Pattern or the Bill of Goods approach, certain adjustments will need to be made to the Results produced by your Analysis-by-Parts before they are ready to be reported as the Industry's Impact.

To estimate the Direct Effects, take what information you already know for Employment, Labor Income, and Output and enter that directly. The template is on Recalculating Direct Effects will help you to estimate the remaining pieces based on data from:

> Region Details
> Study Area Data
> Industry Averages

ABP: Analysis-by-Parts & Bill of Goods Using Commodity or Industry Events with Labor Income Event(s)

ABP: Analysis-by-Parts Using an Industry Spending Pattern Event with Labor Income Event(s)

ABP: Analysis-by-Parts with Manually Margining Bill of Goods

Hospitals: Modeling Private Hospital Impacts with Analysis-by-Parts

Hospitals: Modeling Public & Nonprofit Hospital Impacts with Analysis-by-Parts

Proving Analysis-By-Parts: A Comparison of Event Types